July 26, 2006

Senate votes to tighten foreign investment rules

by ssavage

WASHINGTON (Reuters) - The U.S. Senate on Wednesday voted
to tighten rules for approving foreign takeovers of American
companies, prompted by an uproar over the administration's
backing of an Arab company's acquisition of the operations of
several major U.S. ports.

But a fight was brewing with the House of Representatives,
which was expected to pass a different version of the
legislation later on Wednesday.

The Senate bill, passed by voice vote and sponsored by
Alabama Republican Richard Shelby, would require the U.S.
government to spend an extra 45 days examining deals with
foreign state-owned companies for national security concerns.

This provision is included in the House version. But some
House members oppose another part of the Senate bill that would
require the executive branch to notify Congress of proposed
U.S. acquisitions by a foreign company before they are
approved.

Typically, approvals of foreign acquisitions are granted
within 30 days by the inter-agency Committee on Foreign
Investments (CFIUS) in the United States, which is headed by
the U.S. Treasury Department, unless national security concerns
are raised.

But CFIUS' decision earlier this year to approve the
purchase of several major U.S. port terminal operations by
state-owned Dubai Ports World, without taking extra time to
mull the security implications, caused an outcry in Congress
and led to the push for changes in the law.

Following the political uproar, the Dubai company said it
will sell the U.S. port assets it acquired.